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Equipment loans help your business cover the cost of expensive vehicles, machinery or technology when you want to boost production or update your current operating systems. You can often finance business equipment directly through the manufacturer or seller — but you might find a better deal through a bank or alternative lender.
Use our list to compare some of the best equipment financing companies.
Our lending experts analyze dozens of business loan providers to narrow down the best options for equipment financing. We weigh lenders against these key metrics:
Application process
Rates
Credit score minimums
Customer service reviews
Eligibility requirements
Extra features
Fees
Funding turnaround times
Lender reputation
Minimum and maximum loan amounts
Products offered
We also search for lenders that cater to a range of needs, including those that work with bad credit and newer business owners.
How business equipment financing works
Equipment financing is a type of business loan specifically for purchasing commercial vehicles, machinery or other equipment. It’s very similar to how you finance a car or home: The asset secures the loan, the loan amount is based on the asset’s value and you typically repay the loan in monthly installments.
Most lenders allow you to finance around 80% to 100% of the equipment’s value. The loan term is often based on how long the equipment functions, although it also depends on the specific loan type and lender. Once you’ve repaid the loan in full, you own the equipment.
This type of financing is especially useful for those starting a business or newer businesses that don’t quite have the revenue to buy complex machinery outright. Equipment financing can help in purchasing restaurant ovens, tractors, commercial refrigerators, construction equipment, office furniture, company vehicles and so on.
Equipment loans vs. equipment leasing
Equipment loans are great if you have a long-term need for equipment that doesn’t become outdated after five or 10 years. But leasing may be better suited for businesses that need equipment for a short-term project, need to replace equipment every few years or if your business’s equipment becomes outdated quickly.
Equipment leasing often comes with lower monthly payments than equipment loans, and there’s usually no down payment requirement. At the end of the lease, you usually have the option to return the asset or buy it outright for the remainder of the equipment’s value.
Equipment financing rates and terms
In general, equipment financing is one of the least expensive types of business financing because it’s typically secured by the asset you’re buying.
Business loan marketplaces like Lendzi and Lendio offer equipment financing at rates ranging from around 5% to 25% APR. And that may include an origination fee. You might also have to plan for a down payment of about 10% to 20% of the equipment’s price, depending on the lender.
The monthly and total cost of equipment financing also depends on your loan term. The loan terms could be anywhere from one to 25 years, which is determined by the longevity of the equipment you’re buying. But if your loan allows prepayment without penalty, you can repay your loan early and save money on interest.
Equipment financing calculator
Use this calculator to estimate the cost of financing equipment for your business.
Equipment financing calculator
See how much an equipment loan might cost you each month and overall.
US companies can deduct equipment purchases up to the limit of $1,220,000, as stated in Section 179. You may be able to deduct the full amount of the equipment — even if you haven’t paid off your loan. This deduction can also apply to equipment leasing.
Speak with a tax professional to see if your business and purchased equipment qualifies for the deduction.
How to qualify for equipment financing
Exact qualifications vary by lender, but typical requirements for business equipment loans include:
Credit score of at least 600
Annual revenue around $100,000+
At least 6 to 12 months in business
Down payment of 10% to 20%
Some good news for you: Equipment financing has very high approval rates compared to other business loans. In 2024, 85% of applicants were at least partially approved, according to the Small Business Credit Survey (SBCS) by the Federal Reserve Banks.
Pros and cons of equipment financing
Equipment loans have great perks, but there are disadvantages compared to equipment leasing.
Pros
Self-collateralized loan. Equipment financing typically doesn't require an appraisal, and the loan amount is determined by the asset's value — so it's a simple process.
High approval rate. Equipment loans have a high approval rate of around 85%.
Lower APRs. Secured loans tend to offer lower rates than the average rate for business loans, and equipment financing may come with APRs as low as 5%.
Grow your business. Instead of waiting to have enough cash to buy equipment outright, financing can help you more quickly increase your business's productivity and boost your profits.
Build credit. Taking on an equipment loan can help you improve your business credit, allowing you to qualify for better rates and terms down the road.
Cons
Down payment. Equipment financing often comes with a down payment requirement, typically up to 20%.
Leasing may be better.
Down payment. For equipment with quick depreciation, leasing could make more sense, especially if you need to replace it frequently.
Negative equity risk.
Down payment. There is a possibility that the equipment you finance depreciates faster than anticipated, putting you in a negative equity position.
Equipment financing collateral requirements
When you take out an equipment loan, the lender often puts a lien on the equipment you purchase and may require a personal guarantee from business owners with a 20% or more stake in the company.
If your business defaults on the loan and the equipment can’t sell at a price that repays your loan balance, you’re personally responsible for paying off the remaining balance.
Where to get equipment financing
You’ve got a wide range of lending options to check out before you finance any equipment.
Specialized equipment financing companies
Some companies focus on providing equipment financing to specific industries. Some of the best specialized equipment financing companies offer low rates and fees as well as a quick online application and approval process. Plus, these lenders are experts in the equipment needs of the type of industry they support.
Manufacturer or dealer financing
Some manufacturers or dealers will have equipment financing or leasing options available, often through third-party lenders. Rates may be very favorable, and dealers often advertise promotional rates, sometimes as low as 2%.
But the most notable downside with manufacturer financing is that rates, amounts and terms will vary greatly, and you may have to contact the manufacturer or dealer directly to get hard details. Great credit is often required, and down payment requirements are common.
Banks and credit unions
A more traditional lending option, banks and credit unions are known for competitive rates in business financing. And if you have good credit and a relationship with the institution, it’s more likely that the lender will have more flexible requirements than online lenders or direct financing.
SBA lenders
The Small Business Administration (SBA) loan program offers government-backed business loans. Many of these loan programs offer equipment financing, including SBA 7(a), 504 loans, Express loans and even microloans.
The SBA sets limits on interest rates, loan amounts and terms. And if you can’t repay the loan, the government will repay up to 85% of the loan amount, so they’re a very popular choice for business financing. However, SBA loans are known to be a hassle, often taking weeks or months to apply and get funded.
Online lenders can include direct lenders, financial technology (fintech) companies, peer-to-peer lending platforms and lending marketplaces. These lenders are known for convenience, since most of the lending process is done entirely online: from applying and submitting documents to underwriting and funding.
If you want a hassle-free loan process, these lenders are worth looking into. However, they may not have the lowest rates, especially compared to dealerships or banks.
Need business financing?
Compare business lending products for a wide range of needs, for both startups and established businesses.
If you need equipment to run your business, such as machinery, technology or company vehicles, you can start the process of getting an equipment loan with these steps:
Gather your documentation. Lenders want to review paperwork like business licenses, bank statements, tax returns and other financial information about your business.
Determine how much you need. It’s important to shop around for different equipment options. This gives you an idea of how much funding you need, and it can help you find the best deals.
Check your eligibility. While qualifications vary by lender, general requirements include a good credit score, generally 600+, at least a year or two in business and around $100,000 in annual revenue.
Compare lenders. Once you know the equipment you want and how much capital you need, compare multiple lenders. Check out traditional lenders such as banks and credit unions, online lenders and companies that specialize in providing business equipment loans to find the best deal.
Equipment financing for startups and bad credit
Since the loan is usually secured, credit score requirements are often more flexible, and lenders may be more willing to focus on cash flow and overall revenue instead of just credit. Online lenders or lenders specializing in startup financing may be good places to start — but watch out for high rates and carefully compare providers.
Many lenders advertise a turnaround time of one to two business days. Often, equipment financing can be approved or denied within the same day you apply.
The credit score you need depends largely on the lender, but it also depends on whether you're using the asset as collateral for the loan. For example, if you're using an unsecured term loan or line of credit, you may need a good score of 670 or more. However, if the loan is secured and you're making a down payment, lenders may have more flexible credit requirements.
Lacey Stark is a freelance personal finance writer for Finder, specializing
in banking, loans, investing, estate planning, and more. She has 20
years of experience writing and editing for magazines, newspapers, and
online publications. A word nerd from childhood, Lacey officially got her
start reporting on live sporting events and moved on to cover topics
such as construction, technology, and travel before finding her niche in
personal finance. Originally from New England, she received her
bachelor’s degree from the University of Denver and completed a
postgraduate journalism program at Metropolitan State University also
in Denver. She currently lives in Chicagoland with her dog Chunk and
likes to read and play golf.
See full bio
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